Digital Twins Pave the Way for Greener Supply Chains

In the rapidly evolving landscape of climate-conscious business practices, companies are increasingly focusing on decarbonising their supply chains as part of their broader environmental strategies.

This shift is driven by the need to address Scope 3 emissions, which encompass all indirect emissions that occur in a company’s value chain.

Digital twins, amongst other innovative approaches, are emerging as a key player in this transition. 

Digital twins are at the forefront of the movement to decarbonise transport systems.

These virtual replicas of physical systems gather real-time data to simulate, test, and optimise decarbonisation strategies.

The role of digital twins in transport decarbonisation

The TransiT Hub initiative, spearheaded by Heriot-Watt University and the University of Glasgow, exemplifies this approach.

Supported by a £46m investment from the UKRI Engineering and Physical Sciences Research Council (EPSRC) and 67 additional partners, the TransiT Hub uses digital twins to rapidly experiment and identify effective emission reduction measures.

Feryal Clark, British Labour Party politician and Minister for AI and Digital Government, highlights the potential of this project: "The research TransiT will now carry out is a prime example of how we’re supporting cutting-edge innovations to make that vision a reality.

"This project will also harness the power of transformative digital technologies to cut carbon emissions—demonstrating the incredible impact technology can have in improving our public services, tackling climate change and beyond."

Digital twin technology allows for the simulation of various scenarios, enabling quick identification of strategies to optimise traffic flow, reduce congestion and test new transport innovations. These insights are invaluable for shaping future transport policies and ensuring a smooth transition to a low-carbon future.

Professor Phil Greening, Joint Director of the TransiT Hub at Heriot-Watt University, emphasises the urgency: "With global temperatures rapidly rising, we have run out of time to carry out real-world transport trials and learn from them. So, if we are to meet carbon reduction commitments, we have to do our experiments digitally."

How is tech innovation aiding the decarbonisation of supply chains? 

Beyond the transport sector, decarbonising supply chains involves the precise measurement and documentation of carbon emissions.

Marc van den Berg, Climate Investment’s Global Managing Director for Investments, highlights the importance of technology in this endeavour.

Climate Investment (CI), a specialist decarbonisation investor active since 2016, focuses on technology solutions across hard-to-abate sectors, with a significant emphasis on decarbonising transportation.

CI's strategy acknowledges that there is no single "silver bullet" for decarbonising the sector. Instead, a comprehensive suite of deployable technology solutions is necessary to address the challenge from multiple angles. This holistic approach is evident in the diverse range of companies they support.

• Supply chain decarbonisation measurements
  

Companies are striving to achieve "through-value chain" carbon accounting to generate reliable data, a complex task that requires innovative solutions.

"It’s quite complicated to do this and so these companies are designing platforms to facilitate," says Marc. 

"An example could be Oxy’s spinout, CarbonSig, which is a software platform that uses blockchain technology to track, manage and declare the CO2e of any good or service using digital labels across supply chains. Like CarbonSig, other companies are trying to use blockchain - blockchain is in essence the universal ‘ledger’ for any new global accounting methodology.

"For carbon to have a decentralised carbon assay, it’s necessary for the calculations to be robust, or credentialed. Blockchain is already in use for many other markets. One example in our portfolio could be SensorUp which takes an ‘enterprise data wheel’ approach to data access, sort and report."

• Diversifying supply chains

To mitigate risks associated with global supply disruptions, many companies are adopting multi-sourcing strategies.

"Our portfolio company ZincFive is a good example of an east to west supply chain migrating to a north to south, and US-centric sourcing model," continues Marc.

"ZincFive began to domesticate its materials supply and its cell manufacturing back to North America to lessen reliance on overseas markets and mitigate disruption."

• Specification and procurement

The management of specifications within supply chains is often overlooked, yet it plays a crucial role in ensuring transparency and traceability. 

Marc comments, "Perhaps the remaining area of operations is ‘specification’ management that is generally overlooked through revenue control and audit trail.

"There are some interesting IT type startups in the space. From product design, revision control to supply chain ingredient management for the chemical industry, the hard tech manufacturing industry needs a better assay on what the build specification was for a molecule, a fabricated part or a chunk of software so that the final built environment can go back and assay the overall delivered product in the event of a failure or when making improvements.

"Carbon accounting can easily become part of that assessment." 

• Consumer emissions tracking

Empowering consumers to track their carbon footprint represents another frontier in the decarbonisation effort.

"A neat innovation would be a type of credit card that enabled consumers to assay (endeavour to estimate and inform themselves of) their own carbon footprint, in order to drive awareness of the carbon intensity of their lifestyle – travel, purchasing and investing," Marc adds. 

"This would heighten their awareness of the impact of the lifestyle decisions they are taking. A number of banks now offer ‘green ‘ credit cards that support environmental investments

"There has been a proliferation of smartphone apps such as Commons and Klarna which track the carbon footprint of users’ spending, offers cash back for sustainable choices and, some, also sell carbon offsets. Tracky uses GPS to target travel-related emissions."

The decarbonisation of supply chains is a multifaceted challenge that requires a combination of technological innovation, strategic sourcing, and consumer engagement.

By leveraging advanced technologies like digital twins and blockchain, companies can create more transparent, resilient and sustainable supply chains, ultimately contributing to global efforts to combat climate change.

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